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If you know Warren Buffett then you know that his regular letter to shareholders each year never disappoints. That’s why wanted to share some of the most pertinent quotes with you today.

As I’m sure you recognize, Warren Buffett’s quite bullish on the United States of America in general and he has ignored lots of the negative news that we’ve been hearing as of late.

To quote Mr. Buffett:

“There was a lot of hand-wringing last year among CEOs who cried ‘uncertainty’ when faced with capital allocation decisions (despite many of their businesses having enjoyed record levels of both earnings and cash). At Berkshire, we didn’t share their fears, instead spending a record $9.8 billion on plant and equipment in 2012, about 88 percent of it in the United States.

“That’s 19 percent more than we spent in 2011, our previous high. Charlie and I love investing large sums in worthwhile projects, whatever the pundits are saying. We instead heed the words from Gary Allan’s new country song, ‘Every Storm Runs Out of Rain.’ We will keep our foot to the floor and will almost certainly set still another record for capital expenditures in 2013. Opportunities abound in America.”

Another Warren Buffett axiom is in regards to market timing. He doesn’t believe in it, but he does believe that there’s always an amount of uncertainty in all things investing. He finds it risky to not be invested in the stock market at this time. If you’ve been sitting on the sidelines for the last five years, then he feels that you made a mistake.

“A thought for my fellow CEOs: Of course, the immediate future is uncertain; America has faced the unknown since 1776,” said Mr Buffet. “It’s just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful). American business will do fine over time. And, stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor  (The Dow Jones Industrials advanced from 66 to 11,497 in the 20th Century, a staggering 17,320 percent increase that materialised despite four costly wars, a Great Depression and many recessions. And don’t forget that shareholders received substantial dividends throughout the century as well.)

“Since the basic game is so favorable, Charlie and I believe it’s a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of ‘experts,’ or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it.”

Berkshire Hathaway’s core business model is its insurance operations. As always, Buffett made some very candid in Presley and comments in this regard. He said:

“If our premiums exceed the total of our expenses and eventual losses, we register an underwriting profit that adds to the investment income our float produces. When such a profit is earned, we enjoy the use of free money — and, better yet, get paid for holding it. That’s like you’re taking out a loan and having the bank pay you interest. Unfortunately, the wish of all insurers to achieve this happy result creates intense competition, so vigorous in most years that it causes the P/C industry as a whole to operate at a significant underwriting loss …. There are a lot of ways to lose money in insurance, and the industry never ceases searching for new ones.”

It’s been looked upon as rather odd when the insurance business talks about pricing discipline and underwriting. It often has a very poor track record in this regard. Mr. Buffett explains:

“There is very little ‘Berkshire-quality’ float existing in the insurance world. In 37 of the 45 years ending in 2011, the industry’s premiums have been inadequate to cover claims plus expenses. Consequently, the industry’s overall return on tangible equity has for many decades fallen far short of the average return realized by American industry, a sorry performance almost certain to continue.”

Coincidentally, this matches up to a research report published back in September 2011 by Citigroup. They learn that from the years 1975 through 2010, the P/C industry only generated a total of five years worth of positive underwriting income. According to Keith Walsh’s report, over that five-year period there was a deficit of $457 billion.

Today’s yields will never be able to overcome or subsidize any losses of that magnitude today.

Warren Buffett clearly states that:

“A further unpleasant reality adds to the industry’s dim prospects: Insurance earnings are now benefiting from ‘legacy’ bond portfolios that deliver much higher yields than will be available when funds are reinvested during the next few years — and perhaps for many years beyond that. Today’s bond portfolios are, in effect, wasting assets. Earnings of insurers will be hurt in a significant way as bonds mature and are rolled over.”

The truth for the insurance business does not always apply to every firm. Some of these insurance companies have incredible track records, and they consistently earn underwriting profits. Berkshire Hathaway has done this for 10 years in a row. Warren Buffett gives some advice in his regular down-to-earth style:

“At bottom, a sound insurance operation needs to adhere to four disciplines. It must (1) understand all exposures that might cause a policy to incur losses; (2) conservatively assess the likelihood of any exposure actually causing a loss and the probable cost if it does; (3) set a premium that, on average, will deliver a profit after both prospective loss costs and operating expenses are covered; and (4) be willing to walk away if the appropriate premium can’t be obtained.

“Many insurers pass the first three tests and flunk the fourth. They simply can’t turn their back on business that is being eagerly written by their competitors. That old line, ‘The other guy is doing it, so we must as well,’ spells trouble in any business, but none more so than insurance.”

Warren Buffett also shared some words of wisdom in regards to the newspaper industry. Here’s what he had to share:

“Newspapers continue to reign supreme, however, in the delivery of local news. If you want to know what’s going on in your town — whether the news is about the mayor or taxes or high school football — there is no substitute for a local newspaper that is doing its job. A reader’s eyes may glaze over after they take in a couple of paragraphs about Canadian tariffs or political developments in Pakistan; a story about the reader himself or his neighbours will be read to the end. Wherever there is a pervasive sense of community, a paper that serves the special informational needs of that community will remain indispensable to a significant portion of its residents … We do not believe that success will come from cutting either the news content or frequency of publication. Indeed, skimpy news coverage will almost certainly lead to skimpy readership. And the less-than-daily publication that is now being tried in some large towns or cities — while it may improve profits in the short term — seems certain to diminish the papers’ relevance over time.”

And here’s a few other quotes that are certainly worth repeating…

“More than 50 years ago, Charlie told me that it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price. Despite the compelling logic of his position, I have sometimes reverted to my old habit of bargain-hunting, with results ranging from tolerable to terrible … Of course, a business with terrific economics can be a bad investment if the price paid is excessive.

“But wishing makes dreams come true only in Disney movies; it’s poison in business.”

If you haven’t read it already, you should grab a copy of Warren Buffett’s letter to shareholders. You can learn plenty from this financial genius. Reading his annual letters will help greatly enhance your financial acumen. The letter is certainly worthy of your time, effort and energy.

Back in 1969, billionaire investor Warren Buffett wrote a letter to his investing partners that is now quite famous. In this letter he told his investing partners that he was not able to find any value in the marketplace and he believed it best to return their money and dissolve the partnership.

In the letter he came to the conclusion that only two businesses possess relative value, and one of those was Berkshire Hathaway. As part of an option to his company liquidation, he offered the investing partners the choice of owning pro rata shares of both of these companies.

Warren Buffett’s tremendous personal wealth is evidence to the success of those who stuck with him. Plus, he is the antithesis to the typical greed you hear about on Wall Street, and he has pledged to the Bill and Melinda Gates Foundation a total of $30 billion.

Over the next 50 years, Warren Buffett has been a major powerhouse in the investing world. He is obviously the most famous investor the world has known, and certainly the most successful in the eyes of many. When the technology boom came along, he backed away because he didn’t understand this business model. Luckily or strategically, he was capable of avoiding the dot com bust altogether.

You know Warren Buffett owns stocks, he doesn’t invest in them. When he invests, he does so in the companies and the value that they bring. He’s also known to ignore the emotions and attention of the marketplace.

Warren Buffett has been buying newspapers as of late. It’s funny because this medium is looked at as yesterday’s media. But he has a specific way of investing in newspapers. He only buys small-market, hometown newspapers with a loyal following. Does he know something that the rest of us do not?

In the year 1986, Bill Kovach was hired by the Atlanta Journal-Constitution, and became their new editor. He was previously the Washington bureau chief of the New York Times.

This new appointment brought about a turbulent two years, and the investigative journalism brought two Pulitzer prizes and many more nominations. That’s not a normal occurrence for a newspaper like the Atlanta Journal-Constitution.

They proceeded to ramp up their reporting, and decided to cover more international and national news stories. They also covered critical business stories that revolve around the city of Atlanta. They even picked a fight with the mighty Coca-Cola. This resulted in a proud community, who enjoyed their vastly improve newspaper.

But like all good things, they must come to an end. And Bill Kovach was fired in November 1988.

The city was in an uproar, and they were very upset over this decision. There was even a protest march that went all away down Marietta Street, and went past the front of the newspaper’s office. Such important intellectual leaders like Pat Conroy and Morehouse professor Michael Lomax even participated in this event.

This situation became national news, and the newspaper owners, Cox Enterprises, were vilified in the media. The event gained a lot of attention, and all of it was overwhelmingly in favor of Bill Kovach.

But Cox wanted to return to its regular style of journalism. They weren’t interested in becoming a competitor of USA Today or the New York Times. So Bill Kovach was out. That’s just the way it goes sometimes.

Fuhrman Bisher, a sports reporter for the newspaper during that time, said: “Maybe now we can get back to covering Dixie like the dew” – the tagline of the newspaper.

The message in that saying is quite simple: the local news is still important and it still sells, and the local newspaper has to completely serve the market if it’s going to survive.

As a newspaper editor, you need to realize that a person could get their national and international news from so many different media sources at this point. But there aren’t many ways to get the local news, except for the local newspaper in many cases. There will always be a tremendous demand for comprehensive coverage of local business, local sports, local festivities and the local lifestyle.

It’s fairly straightforward at the empirical level: the life force of a newspaper is always going to be the advertising revenue. If you plan to give advertisers their money’s worth, you have to get in touch with their target audience. If the target audience is local readers, then you have to provide local information. It’s that simple.

According to the way Warren Buffett thinks, this is always going to be a profitable business model.

The media is saying that print newspapers are dying, and national newspapers and news magazines are having a tough time surviving at this point because of the Internet.

At the time of this writing, Time Warner has done something practically unthinkable. They have spun off Time Inc., the company’s magazine portfolio, and turned it into its own standalone company.

In the meantime, Warren Buffett has shrewdly found value in a largely ignored investment that the rest of Wall Street seems to have overlooked. At the time of this writing, Berkshire Hathaway currently owns 28 newspapers. It wouldn’t be surprising if other people seem to recognize this opportunity and eventually follow suit.

Each year, Warren Buffett pens his shareholder letter and explains the things people can expect at the annual Berkshire Hathaway meeting, he talks about the company performance and his reasoning behind certain things that he does. This letter is always packed with plenty of insights, great words of wisdom and pithy comments. The letter this year was no different. Here are the takeaways and highlights of the letter, plus a few ways to use these various strategies in your own life.

1. The fundamentals are everything: Whether you would think it’s a good idea or not, Berkshire Hathaway has begun acquiring many newspapers. Would you like to know why? Because the business fundamentals make sense to them. “News, to put it simply, is what people don’t know that they want to know. And people will seek their news – what’s important to them – from whatever sources provide the best combination of immediacy, ease of access, reliability, comprehensiveness and low cost,” says Buffett. Other people do not need to understand your decisions. But they certainly must make sense to you. Everything else will fall into place once you understand the fundamentals.

2. Opportunity through optionality: The ability to choose the correct path of success from many different choices is known as optionality. By having many options, you will have a much better chance at selecting one that is beneficial. “Because we operate in so many areas of the economy, we enjoy a range of choices far wider than that open to most corporations. In deciding what to do, we can water the flowers and skip over the weeds,” the annual shareholder letter tells us. Your optionality is severely limited if you lack imagination, have lots of debt and only operate in a specific tiny niche market. An open mind, being diversified and having available capital promote optionality. It’s better to have more options than a select few.

3. Reality vs. fantasy: you’re not going to be able to wish yourself into a better position. Warren Buffett will tell you himself that, “Wishing makes dreams come true only in Disney movies; its poison in business.” You certainly made some mistakes. You may even have some debts. You probably have some regrets. You are not alone. But ignoring your personal downfall, your bills or your business will not change these areas of your life. Learn from your mistakes, own up to them and do everything you can to get better so you can make your life better.

4. Mitigating risk allows you to survive and sleep well at night: Risk can be a tricky thing. It is necessary if you plan to produce positive returns, but risking too much can ultimately lead to your overall destruction. “Charlie and I believe in operating with many redundant layers of liquidity, and we avoid any sort of obligation that could drain our cash in a material way. That reduces our returns in 99 years out of 100,” says Buffett. “But we will survive in the 100th while many others fail. And we will sleep well in all 100.” There’s nothing wrong with taking risks. They’re obviously necessary for success. But you must also maintain a highly risk-averse base.

5. A bargain will never be excellence: There is always going to be exceptions to the rule, but over the long haul, solid investments are always going to outperform bargains. “More than 50 years ago, Charlie told me that it was far better to buy a wonderful business at a fair price then to buy a fair business at a wonderful price,” says Buffett. You can apply this powerful and simple principle to any area of your life. But shortcuts, discounts, dishonesty, and bargains will only work temporarily, but they won’t hold up over the long run.

6. Play the game consistently: There is no big secret to the success of Berkshire Hathaway. Consistently executing good strategies based on fundamentals will always produce incredible results. It is not the trendiest thing in the world, nor is the sexiest. But it will work for you, and do so every time. “Since the basic game is so favorable, Charlie and I believe it’s a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of ‘experts,’ or the ebb and flow of business activity,” maintains Buffett. “The risks of being out of the game are huge compared to the risks of being in it.”

7. Gain clarity by embracing uncertainty: There is no immediate certainty in life, and there is nothing wrong with that. As Warren Buffett explains, “Every tomorrow has been uncertain. America’s destiny, however, has always been clear: ever-increasing abundance.” There are a variety of opportunities available through uncertainty. You need to embrace uncertainty, instead of looking at it as a form of anxiety. When you do so you will gain clarity and create for yourself a much brighter future. Buffett says:

“A thought for my fellow CEOs: Of course, the immediate future is uncertain; America has faced the unknown since 1776. It’s just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them (usually because the recent past has been uneventful). American business will do fine over time.”

Warren Buffett’s greatest contribution to this world is much more than his amazing record of accomplishment as an investor. It goes way beyond his incredibly generous philanthropic ambitions. His biggest gift to the world is his well-documented life, where he proves that working hard, being transparent, and living with integrity and constant learning lead you to a life worth living.

The funny thing about this move on Warren Buffett’s part is that three short years ago, at the Berkshire Hathaway annual meeting, he said that the newspaper business is on life support and the truth is that you’re only going to lose money if you are in this business. His actual quote is “for most newspapers in the United States, we would not buy them at any price.” That obviously isn’t the quote of a man interested in purchasing newspapers.

Or is it? In a stunning turn of events, the Oracle of Omaha decided to buy the Omaha World–Herald for $200 million. This is his hometown newspaper so this move possibly had some sentimental value to it. But that doesn’t explain his most recent purchase on May 17, 2012 where Berkshire Hathaway purchased 63 dailies and weeklies from the newspaper company Media General Inc. The total cost of this purchase was for $142 million in cash.

Would you like to know some of the newspapers that were purchased in this deal? The two biggest titles are the Richmond Times-Dispatch and the Winston-Salem Journal. Buffett and company did not get their hands on Media General’s largest property, which is the Tampa Tribune. They are actually in discussions with different buyers who are interested in purchasing the Tribune at this time.

The current COO in charge of the Omaha World-Herald, Douglas Hiemstra, has been named president of the managing company of the 63 newspapers recently bought. The company is called World Media Enterprises, and it was created by BH Media Group, which is a subsidiary of Berkshire Hathaway.

Warren Buffett has really changed his entire outlook regarding the future of the newspaper industry which was earlier commented on. His 2009 remarks were quite grim regarding newspapers and the entire industry in general.

In a current statement, Mr. Buffett says “in towns and cities where there is a strong sense of community, there is no more important institution then the local paper.” He also goes on to say that “the many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”